Cost & Management Accounting

ICWA :: Intermediate
Paper 8 : Cost & Management Accounting
[One Paper: 3 hours:100 marks]

Objective . . .

•	To understand basic concept, processes used to determine product cost
•	To gain knowledge of preparation of budgets , standard costs and variance statements
•	To gain skill for controlling cost and decision making

1.	Basic aspects of Cost Accounting	15%
	• Cost Concepts and Classification of costs • Materials: accounting and control systems procedures and techniques • Labour: accounting, incentive schemes and control systems and procedures • Direct Expenses • Indirect expenses: allocation, apportionment, re-apportionment and absorption of overhead costs. • Cost Accounting Standards.
2.	Cost Accounting Methods and systems	20%
	• Job, batch, contract and process costing. • Cost accounting for service sector • Accounting entries for an integrated accounting system – cost ledgers • Reconciliation between cost and Financial profit and loss account. • Interlocking accounting
3.	Decision Making Tools	20%
	• Marginal costing, break even analysis and its applications in decision making • Absorption costing as a system of profit reporting and stock valuation. • Throughput accounting as a system of profit reporting and stock valuation. • Activity-based costing for profit reporting and stock valuation. • Integration of standard costing with marginal cost accounting, absorption cost accounting and throughput accounting. • Process costing including establishment of equivalent units in stock, work-in-progress and abnormal loss accounts and use of various methods like first-in-first-out, average cost and standard cost methods of stock valuation.
4.	Budgeting	15%
	• Budget Concepts and Preparation • Fixed and Flexible Budgets • Time series analysis including moving totals and averages, treatment of seasonality, trend analysis using regression analysis and the application of these techniques in forecasting product and service volumes. • Fixed, variable, semi-variable and activity-based categorizations of cost and their application in projecting financial results. • Zero base budgeting
5.	Standard Costing	15%
	• Manufacturing standards for material, labour, and overhead. • Price/rate and usage/efficiency variances for materials, labour and overhead. Further subdivision of total usage/efficiency variances into mix and yield components. • Fixed overhead variances. • Planning and operational variances. • Sales price and sales revenue/margin volume variances (calculation of the latter on a unit basis related to revenue, gross margin and contribution margin). Application of these variances to all sectors, including professional services and retail analysis. • Interpretation of variances: interrelationship, significance. • Benchmarking for setting standards
6.	Costing and performance management	10%
	• Business performance measurement for performance improvement
7.	Recent trends in cost and Management Accounting	5%